Data and digital services make UC more competitive


No matter where you look, financial services companies have had a pretty long year in 2021.

In some cases, this has been a banner year, marked by inflated account balances, skyrocketing debit activity, frantic rates of home buying and, by extension, mortgage origination.

Todd clark, CEO and President of COOP Financial Services, told Karen Webster that Credit Unions (CUs) have done well too – but where there is success, competitors sense the opportunity.

“Credit unions thrive, but they fight,” Clark said.

Big tech companies and FinTechs are looking to peel chunks of what might be compared to an “onion” of UC financial services – by removing layers of business that have traditionally been the bulwarks of credit unions.

Some of the changes brought about by the pandemic have benefited all players. We are still seeing a rapid acceleration towards digital banking preferences, and in the United States we are starting to see rapid adoption of the buy now, pay later (BNPL) model – providing a new source of liquidity for co-op members. credit and a source of income for credit unions.

Consumer confidence is improving and card spending is also on the rise. Some of the excess money that has inflated deposit activity is starting to leave member accounts, especially with the holiday shopping season.

Clark said there has also been a marked increase in entrepreneurship, which, in turn, should lead CO-OP CU members to introduce new small business-focused products in the months to come and until 2023.

Today and in the future, CUs ensure that the expectations of their end members are met, whether interactions are digitally, between contact centers or in physical branches.

The urgency is there, because companies focused on digital and only digital are gaining ground. Clark cited Chime as a key example, which started less than a decade ago and now has over 13 million active debit cards in the field. In contrast, he said, many CUs in the United States have been around for a good part of the century and are still striving to break through the million card mark.

Gunning for the main relationship

The key to the chime?

“Chime did it with a great user experience,” Clark said. One of Chime’s offerings that are appealing to consumers is the ability to process direct deposit checks a few days earlier. Unsurprisingly, this feature is especially valuable to paycheck consumers and, as Clark and Webster agreed, could make many people choose Chime as their primary bank.

“I would expect Chime to grow in credit offerings,” said Clark, “and I would expect Robinhood, for another example, to grow in debit cards. “land and expand” strategy.

Credit unions already have a strong line of defense, he told Webster. Their deep familiarity with the members is not that different from, say, a deep understanding of Amazon Prime or Netflix. They can also take advantage of advanced technologies and Big Data to anticipate and recommend products and services that can improve the lives of these members.

In the meantime, Clark said there are several ways forward to help CUs gain new members, and CUs need to make the onboarding experience intuitive, streamlined, and digital. He also noted that the CO-OP shared branch network means members have a consistent set of experiences, no matter where they are geographically or what channels they use.

These distant networks and transparent continuities shape what Clark has called “invisible banking,” and they can help UCs regain the ground they have lost in terms of consumer perception of customer service.

There is also a special opportunity to help customers avoid overdrafts and eliminate fees. Clark told Webster that a beta CO-OP product allows consumers to sift through past transactions and break them down into installments payable over multiple months.

In turn, this helps them avoid overdraft and can make expensive items, or even bills, more affordable. This option also allows the credit union to charge interest on this loan and simultaneously earn additional income from this transaction.

What awaits us

Looking to the future, Clark said, CO-OP and its member institutions are watching crypto as a possible avenue for further development – although he told Webster he remains skeptical, joking that without crypto he can’t. there would be no ransomware.

Whatever services or products are developed, fraud remains a priority. He told Webster that CO-OP recently added a “fraud score” to its COOPER platform that contextualizes the purchasing behavior of individuals using artificial intelligence (AI) to more accurately detect the fraud.

Over the coming year, he said, “We will continue to push very hard on the AI ​​and machine learning path. We believe this is the future ”, especially as CUs seek to personalize their experiences and expand their offers and promotions in real time.

As he told Webster, “Credit unions have a lot of work to do to make sure their digital models are up to date. And, of course, we’re here to help.

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